The Rise of Real-Time Payments: A Financial Revolution

The rise of real-time payments marks a major shift in the financial landscape, allowing instant money transfers 24/7 between banks, businesses, and individuals. This technology enhances speed, transparency, and security, reshaping how transactions are conducted globally. It benefits sectors from e-commerce to banking, driving innovation and improving customer experience. As adoption grows, real-time payments are becoming essential for modern financial systems, signaling a broader transformation in the way money moves across the world.

Companies across the globe are rapidly adopting real-time payment systems to enhance operational efficiency and remain relevant in today’s fast-paced digital economy. These systems allow for almost instantaneous fund transfers, which in turn supports better liquidity control and overall business performance.

Originally designed for consumer use, real-time payments - capable of completing transfers in under 10 seconds - are now becoming essential for businesses aiming to streamline cash flow, cut down on intermediary fees, and gain a competitive edge in the evolving financial landscape.

Although the global real-time payment transaction volume reached $22 trillion in 2024, many businesses have been hesitant to jump in due to high transfer fees. That’s set to shift, however, with volumes predicted to more than double to $58 trillion by 2028. This growth is being driven by regulatory support, tech innovation, and shifting corporate demands.

The rise of real-time payments is largely fueled by increasing demand for immediate fund access, advances in digital transaction infrastructure, and public policies aimed at reducing dependency on cash-based systems.

Real-time payments are now being recognized as strategic financial tools. According to Matthew Purnell of Juniper Research, they offer more than just speed - they also provide better cash flow visibility and lower the risk associated with delayed payments.

In the EU, new rules under the SEPA Instant Credit Transfer framework - implemented in January - require that real-time euro payments cost no more than traditional transfers, pushing businesses toward faster transactions. Meanwhile, in the US, systems like the Clearing House RTP and the FedNow service are increasing transaction thresholds to support larger business operations.

While adoption has been steady in developed economies, emerging markets such as India, China, and Brazil are experiencing a surge in real-time payment usage. India’s UPI, for example, handled 172 billion transactions in 2024 - valued at nearly $2.9 trillion - marking significant growth from the previous year.

This uptake in developing countries is partly due to limited use of traditional debit and credit cards, making real-time payments an accessible option for both businesses and individuals. Purnell notes that these systems are especially useful in countries where more people are becoming part of the formal banking system.

Several global shifts have contributed to the momentum behind real-time payments. The pandemic spurred greater use of contactless and online payments. At the same time, the spread of smartphones and technologies like 5G has made digital financial services more accessible. Governments from countries such as Japan to Sweden are also pushing toward cashless economies.

India’s UPI system stands out as a success story, showing how real-time payments can drive economic inclusion. Developed by a government agency, it links users’ smartphones with their bank accounts and digital identity, ensuring broad access to financial services.

According to the Bank for International Settlements, UPI ranks among the world’s top retail real-time payment systems. It offers simplicity, safety, and efficiency, unlike more closed ecosystems such as China’s, which limit access to competitors. UPI’s open framework fosters innovation and competition.

For now, consumers have seen the greatest benefit from real-time payments, using apps like Venmo and Alipay for quick, everyday transactions. But businesses have been slower to adopt the technology due to high costs. In Europe, fewer than 10% of real-time payment transactions currently come from companies.

Uzayr Jeenah of McKinsey notes that for businesses, real-time payments can cost three to five times more than traditional methods. Despite this, the business case is getting stronger. Faster payments mean businesses can hold onto funds longer, earning more interest, and automation via AI can cut staffing costs in finance departments.

The European Union’s 2024 Instant Payments Regulation could help shift pricing structures. Scott McInnes of Bird & Bird points out that with traditional transfers already free in many parts of the eurozone, businesses will likely gain free access to real-time options too - potentially changing the payment landscape across the region.

This move also reflects the EU’s goal of offering alternatives to dominant US card networks like Visa and Mastercard, which often charge high fees.

Starting October 2024, SEPA Instant regulations will require eurozone banks and fintechs to provide real-time payments at the same price as regular ones. Institutions outside the eurozone will need to comply by 2027, giving time to resolve challenges related to different currencies.

Susan Barton from EY in Milan highlights further benefits: the €100,000 cap on individual payments has been lifted, and batch payments of up to 15,000 at once are now possible. This improves payroll processes and helps businesses manage cash more effectively.

The new rules could also open up RTP capabilities to foreign banks. For instance, a UK-based institution with a branch in the EU could connect to domestic RTP systems, expanding cross-border use. Australia’s New Payments Platform (NPP) allows unlimited transaction sizes, which is especially advantageous for large corporations managing high-value payments. Although NPP enables any amount, individual banks still have the flexibility to impose their own limits. In contrast, the US continues to impose caps. The Clearing House RTP raised its transaction ceiling from $1 million to $10 million in February 2025, while FedNow maintains a $100,000 cap, with an optional increase to $500,000.

One persistent limitation of current RTP frameworks is their domestic focus. While the eurozone benefits from a shared currency, other regions struggle with cross-border real-time capabilities - a major issue for multinational firms managing international payments. The value of global cross-border payments is expected to climb from $190 trillion in 2023 to $290 trillion by 2030, emphasizing the need for innovation in this area.

Most cross-border payments still rely on the Swift network, which doesn’t transfer money directly but rather communicates payment instructions between banks, often using intermediaries. These transactions can be costly and slow.

To address this, fintechs like Wise and Harbour & Hills have stepped in, using localized fund transfers to reduce reliance on interbank systems. While they lower costs, speed improvements are sometimes limited. The Bank for International Settlements is working on Project Nexus, aiming to connect domestic RTP systems through a shared platform. The project involves central banks from countries including Singapore, Thailand, and India and hopes to enable efficient cross-border payments by 2026.

A similar attempt in the Nordic region - P27 Nordic Payments - aimed to integrate RTP systems in Denmark, Sweden, Finland, and Norway. However, the project ran into political issues and failed to incorporate major players like MobilePay and Vipps, eventually leading to its cancellation in 2023.

Niklas Lemberg of Nordea explains that the biggest hurdle in cross-border RTP is not just transfer speed but settlement. Payments must be completed instantly using central bank funds to ensure true ownership transfer. New models are emerging to solve this. In October 2024, J.P. Morgan launched Wire365, which enables businesses to settle US dollar transactions around the clock, globally - a step forward for real-time international commerce.

Blockchain is also being explored for this use. Ripple Labs developed XRP, a cryptocurrency that can be used to bridge currencies during global transfers. However, concerns about volatility have made some companies cautious. To ease those concerns, Ripple has introduced RLUSD, a stablecoin tied to the US dollar, allowing businesses to benefit from fast global payments without the risk of price swings.

Governments are exploring central bank digital currencies (CBDCs) as another alternative. China leads the way, with its digital yuan already processing over $986 billion in transactions by mid-2024.

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Source: gfmag‍